Patrick Pearson, head of DG Internal Market’s banking unit, said acceding to such calls “would be shooting at a gnat with an 80-millimetre howitzer”.

Speaking at a banking conference in Brussels on Monday (23 May), Pearson said that EU banks had asked the Commission to think about setting up a new European regulator four times in the last 18 months.

The banks were complaining of the administrative burden of reporting to 27 different EU regulators.

Pearson said the Commission had asked the companies a series of probing questions that the banks were often unable to answer. He said that since many of Europe’s top 25 banks combined their business with insurance, it might not be helpful to set up a new authority dealing solely with banking.

He said setting up a new supervisor would require a change to the EU treaty and would spark off a large-scale political debate about who the financial authority should be responsible to.

Pearson said that the real discussion needed to be about the ongoing progress with the European supervisory system. “It’s the real discussion. It’s not a sexy discussion but it’s a fundamental debate that has to take place,” he said.

The Commission had to work on shoring up the stability of the European banking system by harmonising how regulators should deal with banks that collapsed. This meant looking at

who would ultimately be liable for a bank’s responsibilities.

EU finance ministers discussed how they should manage a banking crisis at the informal meeting of Ecofin. two weeks ago.

Germany has been pushing for a pan-European system of financial supervisions since last year.

On 22 March the government put forward a proposal calling for a European system of financial supervision for banks and insurers operating in more than one member state.

Internal Market Commissioner Charlie McCreevy has already stated that the current situation does not warrant a single European supervisory authority. In the green paper on financial services, however, published at the beginning of May, the Commission has suggested that if the Lamfalussy process – which establishes supervisory committees – does not live up to expectations, it may resort to regulation.

Pearson was speaking at the international conference on competition, stability and integration in European banking, organised by the Centre for Economic Policy Research, held at the National Bank of Belgium.